This Week In Foodservice reports on the latest government sales numbers for April, looks at some disturbing news regarding first quarter economic performance, provides an update on the Sysco/US Foods merger and reports on a variety of restaurant chain developments.

After a good March, April retail sales were disappointing. The Commerce Department advance report said that total retail sales rose just 0.1 percent in April. Without cars, gasoline and building materials sales dropped 0.2 percent vs. February. However, compared to April 2013 sales were up 4 percent.

Restaurant and bar sales were also disappointing, falling 0.9 percent vs. March. April of last year restaurants and bars saw a 3 percent sales increase. In the first 4 months this year sales are up 3 percent on an adjusted basis. Given the projected rate of menu price inflation it appears that there is minimal real growth.

The caveats for the numbers above are that the Census Bureau only surveys restaurants and drinking places. Hotels, resorts and clubs are not included. Neither are any of the so-called institutional operations such as employee feeding, schools, colleges or healthcare operations. The figures are adjusted for seasonal changes, number of trading days, and holidays but not for menu price increases. Finally, the sales data is called “advance” sales because it is based on a limited sample. Stats can be, and frequently are, adjusted.

Economic News This Week

U.S. economic performance may have been worse than reported in the first quarter. The U.S. Commerce Department’s initial estimate of first quarter gross domestic product of 0.1 percent growth may have been optimistic. Some economists now predict the economy actually contracted, with estimates ranging from minus 0.1 percent to minus 0.8 percent. The difficulty seems to be with the Commerce Department’s assumption regarding the decline in the trade deficit, which some observers now believe didn’t narrow as much as was first estimated.

Initial jobless claimsdeclined by 26,000 for the week ending May 3, 2014. The decrease to 319,000 claims followed 2 weeks of substantial increases. The 4-week moving average increased to 324,750, a bump of 4,500 — a relatively high number historically.

Domestic job creation increased in April, according to the Gallup Organization whose Job Creation Index hit +25. This is just one point below the all-time high of +26 recorded in January 2008. The index is determined by the difference between those surveyed who say their employer is hiring vs. those who say their employer is laying off.

The Institute for Supply Management’s Non-Manufacturing Index rose to 55.2, an increase of 2.1 points, in April. The New Orders Index showed strong growth, rising to 58.2 from 53.4 in March. But the Employment Index fell to 51.3, a decline of 2.3 points. The Institute added that 14 of the 18 non-manufacturing industries included in the study expanded in April.

Consumer spending was steady in April, with the Gallup Organization reporting that consumers it surveyed spent an average of $88 a day. This is virtually identical with $87 a day reported for March and February but is also one of the best April numbers since Gallup began the study in 2008.

Consumer credit climbed by $17.5 billion in March. The Federal Reserve said that consumer borrowing was the highest since February 2013 and was primary driven by a $16.4 billion jump in non-revolving credit such as college and car loans. Revolving credit – mostly credit cards – increased by $1.1 billion in March after falling by $2.7 billion in February.

Foodservice News This Week

Sysco’s merger with US Foods may have received some supportfrom a competitor. Sysco’s proposed merger with US Foodservice is under review by the Federal Trade Commission. Sysco’s position is that even after the merger the foodservice supply market will remain highly competitive. The Wall Street Journal reported the financial performance of Jetro Holdings, the parent company of Restaurant Depot, provides evidence that Sysco does not dominate the field.

Knapp-Track reported April comparable-store salesdeclined 0.8 percent for the 50-plus chains tracked as part of the study. Guest counts declined 2.4 percent, while check averages rose 1.6 percent. Sales in all four weeks of April were down but Malcom Knapp, the study’s editor, did say that more concepts were trending in a positive direction. Knapp-Track data is courtesy of Bank of America Merrill Lynch.

McDonald’s posted weak April sales. Overall, McDonald’s comparable-store sales rose 1.2 percent. U.S. comps were flat and same-store sales in Europe rose just 0.3 percent. Asia/Pacific, Middle East and Africa, which McDonald’s combines into one division, saw comparable store sales increase 2.9 percent. Total sales were up 2.5 percent for the corporation or 3.7 percent in constant currencies.

Illinois Tool Works reported sales from its food equipment division increased 5.3 percent in the firm’s last fiscal quarter.

Corporate Stirrings: Darden ended its experiment of combining its Olive Garden and Red Lobster concepts. Given the firm’s plans to sell off Red Lobster it would appear the move was inevitable. BurgerFuel, a New Zealand based chain, is partnering with Subway to have Subway franchisees open its upscale burger restaurants here in the U.S.

Growth Chains: Subway CEO Fred DeLuca said he believes the U.S. can support an additional 7,000 to 8,000 units and plans on opening that many stores in the next 10 years. The Potbelly sandwich chain plans to open 40 to 48 more stores this year. The Habit Burger Grill plans to open 26 restaurants in 2014. MOD Pizza will open seven new stores by the end of August and has more in the development pipeline. Ruth’s Chris Steakhouse will open four new locations by March 2015.